Reserves at $311 million
Doug Ashbury
Northern News Services
Yellowknife (Jan 05/01) - Aber Diamond Corp. will sort its share of diamond production in Ontario, the company revealed in its recent quarterly report.
"Aber will operate a diamond sorting facility in conjunction with its Toronto corporate offices," the company said.
| Fact File
- Over the first nine months of 2000, Aber made $1.5 million, or three cents a share, compared to a $987,000 loss, two cents a share, for the same time in 1999. |
Toronto-based Aber owns 40 per-cent of the Diavik project and retains the right to market its share of production. That doesn't mean Diavik's diamonds will head south once they're out of the ground.
"We're planning to be involved in polishing diamonds in Yellowknife," Gannicott said. "We want to become a Northern manufacturer.
"In order to withstand the extra costs of doing business in Yellowknife, you have to achieve a premium on whatever you produce.
"Can a diamond manufactured in the North collect a premium, possibly it can."
As well, all diamonds that come out of the ground must be sorted in the NWT for government royalty purposes.
In the diamond business, there are two kinds of sorting -- sorting for market and sorting for government royalties.
The territorial government would like to see more.
"Our preference is to have more sorting done here," said Martin Irving, Government of the Northwest Territories diamond projects director.
"At least they're (Aber) not sorting in Antwerp," Irving said.
Over time, companies might be convinced to do more sorting in the North, Irving said.
"I'd like to stress we're trying to bring work normally done in Belgium to Canada," Aber President and CEO Robert Gannicott said. He also said Aber is certainly open to doing some sorting for market out of Yellowknife.
Currently, the lone location where diamonds are sorted for government royalties is the BHP facility at the Yellowknife airport. BHP Diamonds sorts for market out its office in Europe.
Graham Nicholls, BHP vice-president, external affairs, said the company hopes to expand the role of its Yellowknife sorting and valuation plant -- to include some sorting for market.
Well financed
With the sale of its Snap Lake stake, Aber Diamond Corp. says it is well positioned to fund its share of Diavik diamond mine construction.
"Aber will have the ability to finance a full 70 per cent of the overall construction budget without any equity dilution and is confident that it can secure the balance of the required funding without dilution to shareholders," Aber said in its recent third quarter statement.
Soon after project manager Diavik Diamond Mines Inc. announced the project's investors had given the Diavik mine the production go-ahead, Aber announced it was selling its 40 per-cent share of Snap Lake to De Beers Canada Mining for $173 million.
Sale of Snap Lake -- when the deal closes next month, De Beers will own 100 per cent of the project -- raises Aber's cash reserves to $311 million.
"We weren't anxious to sell (our stake in Snap Lake)," Gannicott said.
"But, he adds, "we had to do something (to raise capital) and we got a fair price," he said.
Aber's share of the $1.3 billion it will cost to build Diavik is $520 million.